INDIAN CAPITAL MARKET

By Kunwar Ajeet Singh Baghel

PGDM III Sem

INTRODUCTION TO CAPITAL MARKETA nation's capital market includes such

financial institutions as banks, insurance companies, and stock exchanges that channel long-term investment funds to commercial and industrial borrowers. Unlike the money market, on which lending is ordinarily short term, the capital market typically finances fixed investments like those in buildings and machinery.

Importance of Capital MarketPooling the capital resources and

and Developing enterprises investorsSolve the problem of paucity of

fundsMobilize the small and scattered

savingsAugment the availability of

investible fundsGrowth of joint stock businessProvide a number of profitable

investment opportunities for a small savers.

Reasons for investmentsOne needs to invest to: Earn return on your idle resources Generate a specified sum of money for a specific goal in life

Make a provision for an uncertain future

wisely is to meet the cost of Inflation

DEPOSITORYA depository is like a bank wherein the

deposits are securities (viz. shares,debentures, bonds, government securities, units etc.) in electronic form.

There are two types of Depository in our country

NSDLCDSL

Which are the securities one can invest in?

Shares Government SecuritiesDerivative products Debenture, are some of the securities investors in the securities market can invest in.

What is SEBI and what is its role? The Securities and Exchange Board of India

(SEBI) is the regulatoryauthority in India established under Section 3 of SEBI Act, 1992. SEBI Act,1992 provides for establishment of Securities and Exchange Board of India(SEBI) with statutory powers for (a) Protecting the interests of investors in securities (b) Promoting the development of the securities market and(c) Regulating the securities market

Modification of provisions relating to mode of computation of capital gains

Under the existing provisions of the Income-tax Act,

capital gains arising from the transfer of a capital asset are

computed by deducting from the full value of the

consideration,

the indexed cost of acquisition and the indexed cost of any

improvement of the asset; and

the amount of expenditure incurred in connection with such transfer.

Classification of capital market 1. Industrial securities

market 2. Government

security market 3. Long term market

1. Industrial security market PRIMARY MARKET OR NEW ISSUE MARKETSECONDARY MARKET OR STOCK EXCHANGE

PRIMARY MARKETPrimary market provide the channel

for sale of new securitiesPrimary market provide opportunity

to issuers of securitiesGovernment as well as corporate to

raise resources to meet their requirement of investment and discharge some obligation

CLASSIFICATION OF ISSUESIssues

Further Public Offering

Fresh Issue

Initial Public Offering

Private placement Public

Right

Offer for sale

Offer for sale

Fresh Issue

SECONDARY MARKETSecondary market refers to a market

where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange . Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.

Difference between the Primary Market and the Secondary MarketIn the primary market,

securities are offered to public for subscription forthe purpose of raising capital or fund. It’s also known as issuer market where company come with IPO.

Secondary market is an equity tradingvenue in which already existing/pre-issued securities are traded among investors. Secondary market could be either auction or dealer market. While stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market

2. Government securities marketStock certificates or inscribed stock

Promissory notes Bearer bonds which can be discounted

PRODUCTS IN THE SECONDARY MARKETS

Equity sharesPreference sharesDebentureBondTreasury BillsWarrants

3. Long term loan market Term loans marketMortgages market Financial guarantees market

CRITERIA OF ENTER INTO THE MARKET

DEMATE ACCOUNTTRADING ACCOUNT

PAN CARD ID PROOF BANK PASS BOOK PHOTOGRAPH

RECENT IPO Name of Issue

Date of Issue

Issue size(in lacks)

Price range

Issue price

LTP

20 microns ltd

08/09/2008 to 11/09/2008

43.50632 Rs 50 TO Rs 55

55 *

RMM india ltd

11/08/2008 to 13/08/2008

44.5 Rs 263 to Rs 272

270 164.5

Austral coke ltd

07/08/2008 to 13/08/2008

72.6 Rs 164 TO Rs 196

196.00 218.85

Nutek India ltd

29/07/2008to 01/08/2008

45 Rs 170 to Rs 192

192.00 111.8

V.I.T.ltd 21/07/2008 to 24/07/2008

27.9 Rs 140 to Rs150

150.00 331.2

KSK Energy

23/06/2008to 25/06/2008

346-11RS.240 TO RS.255

240.00 231.15

L.E.C.Hospital ltd

12/06/2008to 20/06/2008

100 Rs 36 to Rs 38

38 36-05

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